PDA

View Full Version : where to start?



curt
02-06-2011, 04:13 PM
hi, my name is curt. I live in michigan and am an auto repair technician . My company "downsized" or "went a different direction" last november, so I have been unemployeed since then. Never seen it coming... Anyway, because I am a saver and am debt free except for my house, I have enough cash to start my own shop (something I have wanted to do for a long time but was paralyzed by fear). I have found the perfect shop to lease, have the tools necessary to get started, but am unsure of what I need to do first. Do I do a sub-s, llc, dba? once I have that do I need to get a tax id (or is that something that comes along with inc.?) should I contact an accountant to do my books and taxes or is there software I can use for a small business. I know that once I open and am working for myself I am going to love it, but I am confused where to start. I really appreiciate any and all help. thanks, curt

vangogh
02-06-2011, 04:29 PM
Welcome to the forum Curt. Your area was hit a little harder than most of the country. I started my business the last time the economy wasn't doing well. Similar situation. My company let me go and I had been wanting to start out on my own for years. The timing was right and here I am several years later.

Don't over think the business entities. Quite honestly you can start a business with any of them and do well. The different entities will each have their pros and cons and I'll let our resident accountants and lawyers give you more details, since they'll know those pros and cons more than I will. I don't think you get a tax id by default, but their easy to get. Visit the irs.gov website and search for how to get an EIN of similar. I think you can get the id right there online.

Good luck getting started. Feel free to ask any questions you have. Things seem confusing at first, but most of the issues you're wondering about are a lot easier to deal with once you have a little information.

Thanks for joining the community.

Spider
02-06-2011, 04:40 PM
When I started my first business, I did as you are doing - checking the processes, needs, incorporating, engaging an accountant, setting up books, etc. But I was employed and continued to be employed for several months as I designed and pulled the pieces together. I even had people ready to quit their current jobs and start with me once we got going. I was bidding for work as a 'paper company' and when I had landed my first contract, I blew the whistle and everybody came on board and we were up and running. But it took a few months, and I could take the time because we all continued to be employed elsewhere until we were ready. But that was the construction industry where there is a considerable lead time between winning a job, starting work on it and getting paid.

You are considering a very different set-up - the time lag between winning the work, doing the work and getting paid could be as short as one day. If you have the premises and the tools, you could just open the doors and start as a sole proprietor. All you would have to do is make sure you abide by the law - have whatever business licences are required, for example. If you already have some customers - friends who have said they would have you maintain their vehicles - then you can get going pretty quickly and sort out all the corporate details as you go.

This is a completely different approach and much would depend on how long you can go before income is a necessity. Nevertheless, getting a few sales under your belt is always a good thing for gaining confidence.

A consultation with a SCORE representative would be useful, I'm sure, for clarifying the legal requirements in your area. SCORE is the Service Corps of Retired Executives and your local public librarian will put you in touch with them.

Best of luck, Curt.

huggytree
02-06-2011, 05:58 PM
in my state i can sign up to be a LLC for like $100ish....LLC seems to be the most popular way to start.....

i really wouldnt recommend starting anything right now....if you have loads of money and nothing to loose i guess...why not

hire a good accountant that is willing to help you start....mine taught me and set me up with everything needed....most of the startup questions will be answered by an accountant...

getting your fed tax id, state id's, llc or inc,.....

some accountants arent willing to do anything....find one who wants your business...he will help you

KristineS
02-07-2011, 12:40 PM
Welcome to the forum Curt. I'm from Michigan too, so I know how hard the state has been hit. I think it's great that people are trying to get businesses going.

There will never be a perfect time to start a business, and it sounds like you've done more homework than most.

Here are a few links that might be helpful

Starting a business in Michigan (http://www.business.gov/states/michigan/) - Business.gov

Michigan Business One Stop (http://www.michigan.gov/business) - Michigan.gov

Blessed
02-07-2011, 03:30 PM
Welcome to the forum Curt and good luck with your new endeavor!

I'll second the recommendation to SCORE - I have used them as a resource in the past and was thankful for the invaluable expertise that was available.

I'm no accountant and we have some knowledgeable members here that are so for the most part I'll leave that part of your question alone. However, I will say that there is software available that can handle most of what you need on the financial side of your business, but if that part of the work is tedious to you, not your strong point, an area that is likely to get done poorly if you do it yourself, etc... you will be much better off to have someone else handle the books for you. If you enjoy that aspect of the business too then do some research, pickup some software and have at it until you are busy enough that you need to hire someone else to do it!

Blessed
02-07-2011, 03:36 PM
Two other things - first make sure you get the kind of insurance you actually need. We had a business in the auto industry once and were not properly insured - fortunately nothing overly bad happened because of that, but still... and second, once again given the nature of the business you are wanting to open, it would probably be a good idea to find an attorney now - before you have any problems where you would need one.

huggytree
02-07-2011, 06:01 PM
There will never be a perfect time to start a business, and it sounds like you've done more homework than most.



there may never be a perfect time to start a business, but in the middle of a recession is the Worst time to start a business....most businesses fail in good times....in bad times those odds could be even worse!!!.....it all depends on what the business is.....example: if you wanted to start a new home building business id say your nuts.....you need to decide how the economy effects the startup...the economy may take 5-10 years to get back to normal....maybe it never will.......its doubtful it will improve for years

vangogh
02-07-2011, 06:52 PM
Actually it's one of the best times, since you'll probably spend less on everything you need to start up. Some of the largest companies in existence right now started during a time when the economy was bad. I started my own business the last time the economy was in the tank. You can succeed in any economy. You have to operate a little differently, but the general economy has a lot less to do with why one small business succeeds or fails, than how that business is run.

In fact I'd suggest Curt's business would gain customers during a recession. Most people don't have a choice when it comes to having a car that works. If they have a old car and money they might decide the best thing to do is buy a new car. If they don't have the money they're more likely to put money into repairing the old one.

huggytree
02-07-2011, 07:32 PM
a friend of mine who owned a mid sized garage went under last year.....the economy didnt prove good for him....

he had to argue w/ people constantly who didnt have the money for proper repairs....when people dont have money i dont know if its such a good idea to be in a business that can cost a customer $500-1000 to repair something they werent prepared for.....no one saves for car repairs.......my friend didnt seem happy for about a year before he went under....

he wont gain customers during this recession....he will struggle twice as hard if he starts now VS a couple of years from now.....Some of the largest companies started during a recession..true...but many more failed...

im not saying dont do it....im just saying be prepared for a hard time of it

Spider
02-07-2011, 07:33 PM
there may never be a perfect time to start a business, but in the middle of a recession is the Worst time to start a business....most businesses fail in good times....in bad times those odds could be even worse!!!.....it all depends on what the business is.....example: if you wanted to start a new home building business id say your nuts.....you need to decide how the economy effects the startup...the economy may take 5-10 years to get back to normal....maybe it never will.......its doubtful it will improve for yearsI think in the middle of a recession is one of the best times to start a business. Do a bit of research and see when the successful companies started their businesses. The classic one, of course, is Microsoft - started in the middle of the 1973-1975 recession.

Spider
02-07-2011, 08:04 PM
a friend of mine who owned a mid sized garage went under last year.....the economy didnt prove good for him....
.. he had to argue w/ people constantly who didnt have the money for proper repairs....when people dont have money i dont know if its such a good idea to be in a business that can cost a customer $500-1000 to repair something they werent prepared for.....no one saves for car repairs.......my friend didnt seem happy for about a year before he went under....
.. he wont gain customers during this recession....he will struggle twice as hard if he starts now VS a couple of years from now.....Some of the largest companies started during a recession..true...but many more failed...
.. im not saying dont do it....im just saying be prepared for a hard time of itYou bring up a good point here, though. Businesses go out of business during recessions.

Funny, that - a recessions is a good time to start a business, but a bad time to have a business.

This is the reason, I believe - and you are a good example of this, Dave -- Recessions are generally quite short-lived, often only a couple of years. When you are starting a business, the first couple of years are tough going anyway. Customers are being set adrift as their regular suppliers go out of business, so for a new business there are lots of customers without a favorite business to patronize. At this time, a new business doesn't need a lot of customers - they only want *some* customers. And there are some customers looking for a replacement supplier.

For the business already in operation when a recession starts, it is impossible to recognize a recession until several months into it. The official definition of a recession is a negative growth rate for three consecutive months. So the earliest you can know if you are in a recession is after 3 months. Consider that a business will have to adjust to the reduced economic activity, will not start adjusting for another month or two, their planning, reduced purchases, laying off staff and other cost-cutting measures will not come into effect for another three months, and 9 or 10 months have passed. Many small existing business cannot go this long before they are in serious trouble.

In your case, Dave, you started your business in mid-2007, I think you said. This latest recession began in December 2007 and ran until June 2009. Look at your growth and success from 2007 - 2008 - 2009 and now 2010. This recession has been very good for you. It's the next recession that you must watch out for.

No, sir. This is a wonderful time to start a new business. A perfect time, in fact.

vangogh
02-07-2011, 11:03 PM
It's funny because I was thinking of saying what Frederick said about the irony of it being good to start a business, but not so good to own one during a down economy. By the way I' saying down economy since the recession ended about a year ago. huggy I know your area has been hit a little harder than most this time around, but the recession has been over for awhile now. We're in the slow recovery phase whatever it's officially called.

I think one reason it can be good to start a business when the economy is bad is because early on a lot of businesses are spending more than their taking in. They have start up costs and put money into advertising and marketing. Lot's of businesses operate at a loss in the beginning. When the economy is bad that loss is less. A few months later when the marketing begins to pay off the company is in less debt than they might have been in other years.

As far as customers are concerned people still spend money when the economy is less than rosy. It's more that they prioritize what they spend it on. Maybe during the worst of times the money can only be spent on absolute necessities, but very rarely is it the worst of times.

Whether the general economy is good or bad any business can still succeed. You'd have to market and advertise differently, but both can still be effective.

huggytree
02-08-2011, 08:27 PM
things were going down hill when i started, but not rock bottom.......were still near the bottom now.......

big difference between 2007 and 2010/2011...ALOT of businesses have gone under....last year was really bad for many people i knew....

just because Microsoft started in a recession and succeeded doesnt mean the average joe will...most likely he wont...

vangogh
02-08-2011, 10:40 PM
The average joe fails during good economies too. The reasons small businesses typically fail has little to do with the general economy. The economy is often blamed, but it's seldom at fault. Small business fail because

1. they don't have a sound business model
2. they fail to adequately market themselves
3. they fail to put in the effort it takes to get going
4. they didn't have enough savings to weather the early days of a new business
5. they aren't willing to invest in their business as much as needed

among other reasons. People blame the economy because it's easier than blaming themselves. It's shame because those people who can understand their own responsibility in why their business failed have a good chance of succeeding with the next one. Those that blame the economy will likely fail again the next time they start.

Spider
02-08-2011, 11:49 PM
Average Joes don't succeed in business, whether the economy is good or bad.

Blessed
02-09-2011, 09:45 AM
... Anyway, because I am a saver and am debt free except for my house, I have enough cash to start my own shop (something I have wanted to do for a long time but was paralyzed by fear). I have found the perfect shop to lease, have the tools necessary to get started...

These things here are reasons why Curt should be able to succeed even in this "bad economy" as long as he is smart and makes good decisions on where to spend that money.
1) he is "a saver" that makes me think he will be careful with how he spends what he has saved
2) he is debt free except for his house and has enough cash to start his own shop - that takes a lot of pressure off - he has manageable financial obligations and the means to deal with them.
3) he has wanted to start this business for a long time - sure, he hasn't done it because of "fear" but once you've lost your job (security) and now you're sitting around looking at the classifieds and saying "now what?" the reason of not striking out on your own because of fear is easily put aside.
4) He's "found the perfect shop" - in this type of business location is everything
5) he "has the tools necessary to get started." - I'm sure there are more tools that would be handy to have - trust me, my husband was a mechanic for a long, long time then he worked in industrial maintenance and now we have two toolboxes in the garage full of tools and an additional rider on the insurance policy since the value of those tools is greater than the value of both of our vehicles put together and we still have to buy new tools... - anyway - Curt has what he needs to get started so he doesn't have to invest any of his savings in tools.

word-of-mouth is the best type of advertising - Curt is an auto repair technician - he gets to working and word will spread quickly. Yes, he needs to spend some money on business cards and signage at his shop and a website and traditional marketing but if he's a good mechanic and has a good reputation in the area and really does know what he's doing under the hood of a car he should be able to succeed.

curt
02-12-2011, 01:28 PM
Thanks for the great responses from everybody. There has been alot said about starting a business in a down economy and it is a real stumbling block for me. I think I have worked past the worries of the economy and am ready to go forward. what I have done it the last week is, filed for my llc, state and federal tax id (ein). I have met with the city about codes and what else has to be addressed with the building owner (I am going to lease the building) and he has been very helpful and said he will make the necessary changes. Yesterday I had a total mind meltdown and did nothing. I cant stop thinking about all the things I need to do and purchase. I was really questioning if I would be able to do this until this morning. I did some work for my brother-in law. After fixing his car and getting some encouragment from him, I came inside and started my brain in motion again. I sat down at my computor and came to this site to see what all has been said in the last week, when I read Jenn's post. What she said is exactly what makes me know I can do this. Thanks to all and escpecially Jenn. I am in go mode again. What a great resource this web site is! I will keep you posted as to my progress. Thanks again, curt

Harold Mansfield
02-12-2011, 02:19 PM
I'm from Michigan too ( although I don't live there anymore).
It all depends on what area you are opening the shop in. I wouldn't put a shop on the west side of Detroit on the corner of Joy and Shaeffer , but I may make a go at it in a distant suburb.

jamesray50
02-13-2011, 12:14 AM
Hi Curt, welcome to the world of self-employment. You have accomplished quite a bit in a week. My suggestion is that you also purchase an accounting software to keep track of your bookkeeping. And open a business checking account if you haven't already done so. You will want to start keeping track of your financial transacations right off the bat rather than waiting several months and then trying to enter them later. It will cost you less money in the long run. Good luck with your new venture.

vangogh
02-13-2011, 11:29 AM
I'm glad we could help Curt. As far as the overwhelming feeling don't try to do everything at once. Just take care of things one at a time. Before you know it you'll have gotten most everything done. You've already accomplished a lot in this last week and I'm sure you can accomplish more.